Historical Background

The TIF Process

        Frequently Asked Questions

II. City of West Bend TIF Districts

        TID #1 Downtown Revitalization

        TID #2 South Industrial Park

        TID #3 East Side Industrial Growth

        TID #4 & 8 West Bend Corporate Center

        TID #5 River East Redevelopment

        TID #6 Paradise Drive/Main Street Reconstruction

        TID #7 River Road/Lang Street Reconstruction

III. Conclusion

IV. References

The intent of this report is to provide general information on tax incremental financing (TIF) within the City of West Bend. The first section provides a historical background of TIF, a description of the TIF process, a list of "frequently asked questions", and a synopsis of TIF usage in Wisconsin. The second section provides a description of the eight TIF districts in the City of West Bend. The final section contains a summary and addresses the future of TIF in the City of West Bend.

TIF is a tool for economic development available to municipalities to promote industry, redevelopment and blight elimination. The intent of TIF is to help municipalities finance economic development projects that would not otherwise occur.

Projects are funded by using taxes collected in the district itself, without raising the taxes of residents outside the target area. This is often called "redevelopment from within". It is viewed as a way to raise money for redevelopment and to stimulate industrial growth without using general revenues.

In a TIF district, public investments are made to encourage growth and redevelopment. TIF finances the public investments by capturing, for a limited time, the increased tax revenue that results when private investment is stimulated. Tax revenues resulting from the growth are called the "tax increment". (Refer to Appendix A.1 for terminology.) As private investment adds to the tax base within the district, the increment is directed back to pay for the public investment projects. When the projects are paid off, the increment goes back into the general tax revenues.

The theory of TIF uses several principles to support its use.

The tax base in the district was stagnant or declining, and the tax revenue increase would not have occurred unless the municipality made substantial public expenditures. Healthy areas that grow and develop without the intervention of TIF do not need tax revenues diverted to a municipality. Where TIF is necessary, it will cause an increment that the taxing authorities would otherwise not have realized.

If the municipality must provide substantial public improvements to attract development, the overlying tax districts that benefit from the resulting increase in the community tax base should share in the cost of public improvements.

The taxing authorities that give up their increment for a number of years will eventually receive the revenues of a larger tax base when the TIF expires.

The concept of TIF has existed since the early 1940s. However, the first TIF was not adopted until 1952 and widespread use of TIF did not occur in most states until the 1970s. Changes in federal urban renewal and community development funding policies were part of the reason TIF usage increased. Federal programs targeted towards urban renewal and development were combined with larger general aid programs that spread funds among more communities and decreased focus on redevelopment financing. Municipalities in states with TIF laws began using it extensively and other states began enacting TIF laws in order to create a funding source for municipal redevelopment projects.

The federal funding changes, as well as a recession during the mid-1970’s, influenced the passage of Wisconsin’s TIF law in1975. The Wisconsin law sought to counteract the economic downturn by allowing municipalities to work with the private sector to stimulate economic growth and employment through urban redevelopment projects.

The Wisconsin legislature determined that all taxing jurisdictions benefiting from urban redevelopment should share in its cost. Public improvements, such as sewers, streets and light systems, usually result in an expanded local tax base. Although the cost of these improvements is normally financed entirely out of municipal revenue, it was argued that county, school, and technical college districts also benefit from the expanded tax base. The legislature recognized that this was an inequitable situation that sometimes discouraged development and redevelopment efforts. TIF was initiated to ensure that overlying local taxing jurisdictions shared project costs so those who benefit directly or indirectly would help pay development costs. All taxing entities were viewed as partners in promoting the expansion of their tax base.

1127 TIDs have been created in Wisconsin since the program was established and two-thirds of those remain active. TIF has been used widely in the state – 69 out of 72 counties have used TIF as an economic development tool. (See Appendix A.2 for map.) There are currently 758 active TIDs consisting of $3.5 billion in base year equalized value. As a group, these TIDs have increased in value 313%. The most commonly stated purpose for creating a new TID has been industrial development. Since 1975 there has never been a year that TIF has not been used. Individually, the largest cities in Wisconsin contain the greatest number of TIDs. TID use, when grouping municipalities by population, is most prevalent in communities with populations from 1,000 to 5,000 people. These communities contain 36% of all TIDs. In recent years the municipalities with less than 1,000 residents have rapidly increased the rate at which they create new TIDs.

TIF has facilitated many development success stories in Wisconsin since its introduction in 1975. However, the program has also generated suggestions for improvement, as well as comment from some who question the degree of need for TIF as it has sometimes been used in this state. In 1999 Governor Thompson created the Working Group on Tax Incremental Finance. This working group came in response to many proposals for changes to TIF law being sought by various groups. They conducted a comprehensive review of TIF law in Wisconsin and made several recommendations ranging from technical adjustments to significant policy changes. The Working Group on TIF produced its recommendations in a report dated December 2000. During the 2001-2002 biennium legislation was introduced incorporating the majority of the group’s recommendations but the legislation did not pass.

The TIF process begins with a finding that redevelopment is necessary in the public interest. State statutes require that district designation be based on a finding of blight. An area is chosen in need of redevelopment or growth stimulus and a project plan is prepared to provide guidance. The planning staff or consultant of a local redevelopment agency or planning commission usually performs this function. The TIF project plan must list and estimate the project costs of improving the district. It is central to the tax incremental concept because it ensures that TIF is administered reasonably and consistently. The municipal attorney must write a formal opinion advising whether or not the plan is complete and in compliance with law.

According to state statutes, a TIF project plan must include the following elements:

Statement of kind, number and location of proposed public works.

Economic feasibility study.

Detailed list of project costs.

Description of the methods of financing and the time when such costs or monetary obligations are to be incurred.

Proposed changes in zoning ordinances, master plan, building codes, map, and city ordinances.

List of non-project costs.

Proposed plan for relocating any displaced persons or businesses.

Indication of how the district’s creation promotes the orderly development of the municipality.

A map showing existing uses and conditions of real property in the district.

A map showing proposed improvements and uses in the district.

An attorney’s opinion that the plan is complete and complies with the law.

Current state statutes call for TIF redevelopment areas to meet certain requirements. A TID may be created if 50% or more of the proposed district’s area is blighted, in need of rehabilitation or conservation work, or suitable for industrial sites. Property that was vacant for the seven years preceding creation of a TID cannot comprise more than 25% of the district’s area, unless the district is created to promote industrial development. Land acquired through condemnation is excluded from this requirement. An area designated as suitable for industrial sites must be zoned for industrial use both at the time the TID is created and throughout the life of the project. Furthermore, municipalities are prohibited from establishing a TIF district if the equalized value of a proposed TIF district and all existing TIF districts exceeds 7% of the total equalized value of the municipality, and the equalized value of a proposed TIF district and the value increment of all existing TIF districts exceeds 5% of the total equalized value of the municipality.

Once the initial planning process is complete, the planning commission and legislative body of the municipality approve the TIF resolution and project plan for the district. Two public hearings are required prior to approval.

Next, the municipality convenes a joint review board which must approve the TID within 30 days after the resolution is adopted by the legislative body. The joint review board consists of one member representing each taxing jurisdiction that can levy taxes on property within the TID – school and technical college districts, county and city or village – and one public member. The board must base its decision on whether or not to approve creation of a TID on three criteria: (1) whether the development expected in the TID would occur without the use of TIF; (2) whether the economic benefits of the TID, as measured by increased employment, business and personal income and property values, are sufficient compensation for improvement costs; and (3) whether the benefits of the proposal outweigh the anticipated loss in tax revenues of overlying taxing districts.

If the joint review board approves the creation of a TID, the Wisconsin Department of Revenue (DOR) is responsible for determining if the municipality has complied with all procedures, submittals and notices in a timely manner. If the municipality has met all of these requirements, DOR certifies the base year and the base value of the TID. The base year is the official beginning of a TID from which all values are calculated. The base value is the equalized value of all taxable property and the value of municipally owned property. It does not include municipally owned property used for certain municipal purposes, such as police, fire and library buildings.

Tax revenue resulting from growth over the base value is called "tax increment". Tax increment equals the general property taxes levied on the value of the TID in excess of its base value. In short:

A municipality retains all of the property taxes that are levied on the increased property value (tax increment) of the TID and is authorized to use the proceeds to pay for eligible project costs.

The property taxes that are levied on the base value of the TID continue to be divided among the municipality and other tax jurisdictions.

Once the TID is established and the project plan is approved, the municipality begins to prepare the district for a developer. Land is acquired and assembled, necessary residents and businesses are relocated, and the land is cleared. Site improvements such as streets, sewers and lighting systems are installed. After the site is cleared and improvements completed, the land is usually sold to private developers at a relatively low cost. These developers make changes and improvements to the land in conformity with the project plan.

The municipality may complete numerous activities that attempt to stimulate private sector investment within the redevelopment area if they directly relate to blight elimination, rehabilitation, conservation or industrialization. Eligible TIF project costs include, but are not limited to, costs related to capital development (such as public works or improvements), environmental remediation, financing, real property assembly, professional and administrative services, and organizational activities.

TIF project activities are initially financed through general obligation bond issues, promissory notes or a transfer from the municipality’s general fund. In general, all project costs, including repayment of bond principal and interest and reimbursement of the general fund, are funded by tax increments.

To implement a project plan, a special fund is created in which all tax increments must be placed. With limited general exceptions, the fund can only be used to finance the district’s eligible project costs. Tax increments in excess of the project costs listed and estimated in the project plan cannot be expended. Also, eligible project costs must be reduced by the amount of investment earnings and by the amount of user fees or charges received in connection with the implementation of the project plan.

Public expenditures and debt in TIDs are made at the pace the private development occurs and in coordination with development agreements so that increment will be sufficient to cover expenses. In addition to TIF revenues, the City has the ability to levy special assessments on developed parcels benefiting from the public improvements.

Municipalities are required to prepare and make available to the public annual reports describing TIF project status, expenditures and revenues. Audits are required within 12 months of: (1) the time when 30% of the project expenditures are made; (2) the end of the expenditure period; (3) the termination of the district.

For TIF districts created before October 1, 1995, project expenditures may be made for up to 10 years after the TIF district has been established. For TIF districts created after September 30, 1995, project expenditures can be made for up to seven years after the TIF district has been established. A municipality is permitted to modify the boundaries of a TID within the first seven years after it has been certified by DOR. The value of additional territory must be added to the original base value of the TID.

TIF districts can exist until the earlier of the following occurs:

All project costs have been paid.

For districts created before October 1, 1995, a maximum of 20 years after the last expenditure has been made, but no more than 27 years total. For districts created after September 30, 1995, a maximum of 16 years after the last expenditure has been made, but no more than 23 years total.

The local legislative body dissolves the district.

 

Because TIF spreads the cost of development out to all of those who will enjoy it, it is considered by many to be the most equitable means of stimulating and financing new infrastructure and development.

Developers who locate in a TID may be able to put more resources into their site layout, architecture and landscaping. The value of the development is worth more, reinforcing the increase in the community’s property tax base. Developments with a focus on the integrity of the site are more likely to produce a lasting benefit to the community.

Do other taxing entities suffer during the life of a TID?

The school district, technical college and county will not have the benefit, for local tax purposes, of any expanded property tax base in the TID until it is terminated, which can take up to 27 years for many TIDs. However, this delay can be justified if it is concluded the growth in property tax base would not have occurred during that period without the TID. Successful TIDs are ultimately beneficial to the finances of all taxing entities.

Why do some TIDs fail?

Although an area may exhibit blight, it may not be possible to produce a sufficient increase in the tax base to support a TIF program. An element of TIF that statutory considerations do not address is the important role of the market. Politically and economically, TIDs must produce visible results. A weak market for real estate development, severe relocation or environmental problems or a potential for only nontaxable public ownership can make it impossible to use TIF successfully. In any of these circumstances, the tax increment may be inadequate to offset required TIF expenditures. The market situation that identifies a need for TIF is one in which the potential market exists, but it cannot be reached unless certain impediments are removed and their removal is possible.¹

Redevelopment projects in the central business district of a municipality are generally considered a higher risk because of their unique challenges. Unlike industrial TIDs, downtown redevelopment projects usually require more effort to attract new development, contain environmental contamination, and have challenging relocation components.

What happens when a TID fails?

When a TID falls short of its goals, it has a financial impact on the municipality. A deficit occurs when projected revenues are lower than expected and expenditures are not met. There are options for a municipality if the TID cannot meet its obligations within its lifetime. A municipality will try to reduce project expenditures if shortfalls are noticed within the first seven years. It may decide to continue with the TID in hopes that some potential development will change the projected deficit into a positive cash flow, or it can dissolve the district at which time the city becomes liable for all unpaid costs. Any municipality creating a TID should be willing to accept the possibility that it may not produce the desired results. When this happens, the taxpayers in that municipality will be responsible for any unpaid project costs. For this reason, it is important to plan the district in a realistic way. Municipal officials and overlaying taxing jurisdiction officials should be familiar with the tax incremental law and its ramifications.

Do property owners pay for TIDs?

An objective of TIF is to finance projects by using taxes collected in the district itself, without raising the taxes of residents outside the target area. TIF is viewed as a way to raise money for redevelopment and to stimulate industrial growth without using general revenues. Through the lifetime of a TID, the new development pays for the project activities. TIF finances activities that allow development to occur, such as infrastructure creation, street improvements, property acquisition and demolition. Without TIF, the entire cost of those activities would be passed on to property owners. Instead, the new development assumes the cost because the activities are reimbursed by taxes generated from the new development. Furthermore, road improvements that are needed regardless of new development are sometimes taken care of through TIF, creating increased savings for property owners.

However, if a TID does not generate enough increment to pay for its project costs, a property tax advance may be requested in order to allow the district to cover expenses. General revenues fund are used to cover TID expenses only as a last resort and the TID must repay the fund with increment revenue when possible.

Does TIF disproportionately benefit certain types of development?

A TID may only be created after it is proven that development would not be possible without TIF. The Joint Review Board makes this decision when it approves a TID. According to Wisconsin Statutes section 66.1105 (4m) (c), one of the concepts the Joint Review Board must base its approval on is " whether the development expected in the tax incremental district would occur without the use of tax incremental financing." Although this concept is open to interpretation, the intent of the law is to ensure that TIF does not fund unnecessary improvements. Therefore, the only benefit to a developer in a TID should be that TIF makes certain developments possible, but this also benefits the community as a whole, so it is not a disproportionate advantage.

Furthermore, commercial development is not subsidized by TIF. TIF districts must be comprised of at least 51% industrially zoned land. In TIDs that include commercial property, public infrastructure improvements were necessary with or without it. The inclusion of commercial property in some TIDs allows the City to maximize increment when paying for project costs, but it is not intended to be the main purpose of the TID.

Do property owners in a TID pay taxes?

The assumption that property owners in a TID do not pay taxes is incorrect. Tax rates apply equally to all property and business owners regardless of TIF. During and after development, all private property owners within the district, including developers, pay property taxes on the current value of their property, the same as non-TID property owners.⁵

Once a TID has been certified, a municipality retains all of the property taxes that are levied on the increased property value of the TID and uses the increment to pay for project costs. The property taxes that are levied on the base value of the TID continue to be divided among the municipality and other taxing entities. When the TID is paid off, all taxing entities obtain the full amount of tax revenues created by the new development.

Does TIF create inappropriate debt?

TIF debt is not considered inappropriate. Although the City of West Bend has incurred debt directly related to TIF, the debt is viewed positively by financial analysts. In fact, the City of West Bend has earned an A1 bond rating from Moody’s, in part because of use of TIF districts to stimulate industrial and commercial development.

Furthermore, the City of West Bend’s TIF debt is not considered unusually high. The current city debt of $50 million is 3.5% of the equalized property value. State statutes allow a city to carry a maximum of 5% debt to equalized property value, therefore the City is below the limit of what is considered acceptable.

Since 1979, the City of West Bend has created eight TIF districts which encompass 1577 acres of land. West Bend’s TIDs were created to stimulate industrial growth and eliminate blight. The TIDs in West Bend are geographically varied and contain all types of property.

The City’s first Tax Incremental Finance District was comprised of 53 acres located downtown. It was created in January of 1979 and terminated on May 6, 2002. TID 1 was part of a larger downtown redevelopment effort in which community leaders initiated several projects to improve the economic viability of downtown. At that time the downtown was already experiencing competition from new development on the outskirts of the City and was in need of revitalization. Property values in the area were either stagnant or declining.

TID 1 sought to address two issues – transportation problems and the deterioration of downtown infrastructure. The intersection of 7^th Avenue, Main Street and Washington Street was given an "F" rating by transportation experts indicating it needed substantial improvement. At the time the TID was created, the U.S. Highway 45 bypass on the west side of the city was underway, creating an opportunity to update the downtown transportation system. The State Department of Transportation (DOT) took the lead in a project which reconfigured traffic flow on Seventh Avenue, Washington Street and Main Street, creating a safe and efficient route for automobiles and pedestrians. A bridge across the Milwaukee River leading to a new road called Veterans Avenue was also constructed.

Community leaders took advantage of the DOT’s transportation improvements by simultaneously making pedestrian, utility and landscaping improvements. They enhanced the downtown’s appearance and minimized pedestrian and automobile conflicts in an effort to encourage private investment and strengthen property values in the downtown. The intent was to maximize positive impacts in the downtown by combining overlapping projects.

In order to upgrade the downtown infrastructure, new water and storm sewer lines were constructed, electrical lines were buried, lighting was added, and Main Street was rebuilt, along with sidewalks and landscaping. Additionally, Veterans Avenue, Sixth Avenue and Seventh Avenue were reconstructed with lighting and landscaping, traffic signals were installed and modified at major intersections, and an existing city parking lot was expanded. A covered pedestrian bridge across the Milwaukee River and the first phase of the Riverwalk were constructed.

Through the life of TID 1 there were periods when the district did not generate enough increment to make loan payments, but it was ultimately deemed successful. Initially, the district had slow growth and created a substantial shortfall of cash. The General Fund advanced funds on the tax levy for twelve consecutive years to pay debt service. The accumulated shortfall reached almost $2.4 million, until 1996 when the TID was able to repay the General Fund with increment that exceeded debt repayments. For six years annual payments of over $320,000 were made from the TID to the General Fund. As a result, the balance owed to the General Fund was reconciled. Although TID 1 was authorized to exist for 27 years, it closed three years early, in May of 2002.

Today, the State Highway 33 intersection with Main Street, Seventh Avenue and Veterans Avenue is safer and more efficient. Downtown infrastructure has been upgraded and provides pedestrian and vehicle access with few conflicts. Furthermore, the revitalization of downtown has helped support the evolution of a cultural district in the city. Many of the downtown improvements that were done under TIF, such as sewers and street reconstruction, would have had to be done eventually and would have gone on the general property tax rolls or utility rates if not for the TID. The revitalized district brought many intangible benefits to the City, including refurbished facades and new businesses on the fringe of the district, all of which improved the City’s image.

During the recession of the early 1980’s, the City identified the need to create jobs and strengthen the local tax base through industrial development. With this goal in mind, the City purchased 208 acres of land for a new industrial park. TIF was enacted to pay for public improvements and access to the industrial park. Project activities included construction of utilities, streets, sewer facilities, water facilities, railroad infrastructure and other site improvements. By the mid-1990’s, the industrial park was complete and the lots were in demand.

Another task identified in the project plan for TID 2 was the construction of a bridge over the Milwaukee River at North River Drive. Project activities included bridge construction and dam removal. This task was not completed within TID 2 time limits because of an initial lack of increment from the industrial park due to time-consuming Department of Natural Resources (DNR) issues. The project was eventually completed using General Fund revenues instead of TID 2 revenues.

The South Industrial Park created by TID 2 has been very successful. A resolution closing the district was passed and approved by the Common Council on April 26, 1999. It met its financial obligations in 16 years - a full 11 years before its required deadline. Companies located there include Metalcraft, Serigraph, Post Printing, Badger Packaging, Broy Co., Gruber Tool & Die and Cesaroni Design, to name a few. Without creating the industrial park, the City would have diminished its opportunities to attract and locate industry within its corporate limits.

TID 3 was created to expand industrial development on the City’s east side. The existing east side industrial park was full, so the City proposed a second industrial park to provide business opportunities on West Bend’s east side. TID 3 also sought to provide business expansion opportunities associated with the West Bend Municipal Airport. This was a relatively new concept at the time, but has since proven to be an attractive business development alternative.

At the same time, Serigraph, an international printing company, considered relocating out of the state due to difficulties expanding their plants in West Bend. The relocation of Serigraph would have created a significant loss of jobs in the community. TID 3 helped provide infrastructure improvements to Serigraph’s manufacturing plant on County Trunk Highway I, which allowed the company to expand its headquarters in West Bend. In order to create a stronger financial structure, the project was planned in conjunction with other revenue sources. Serigraph, Washington County and the City of West Bend obtained three grants: a Transportation Economic Assistance (TEA) grant from the Wisconsin Department of Transportation (DOT) in the amount of $742,500, a Community Development Block Grant in the amount of $500,000 and a Surface Transportation Program grant from the DOT in the amount of $400,200. As a part of the grant funding, Serigraph signed an agreement with the City in which they made a commitment to create and maintain 180 new full-time jobs.

TID 3 projects include the extension of utilities west of the airport, construction of a Trenton Road bridge and improvements to the intersection of River Road and County I. Activities outlined in the project plan are land acquisition, water system, street, roadway, sanitary sewer, stormwater and drainage improvements, bike path construction, street lighting, extension of gas and electric service, environmental remediation, and administrative, planning and auditing services. The activities were planned to occur over a ten-year period.

TID 3 was amended in September of 2000 to accomplish the same goals of the original project plan, but within a larger area. The amended area consists of additional land north and south of State Highway 33. The land had been vacant for many years because it needed municipal improvements to allow development. In cooperation with developer Ziegler-Bence, the industrial area was planned to provide the city with a larger second east side industrial park called Wingate Creek Business Center. The City will build the infrastructure and the developer will be responsible for owning and marketing the land. To ensure success of TID 3, a development agreement was signed between the City and Ziegler-Bence that requires the developer to compensate the city for increment tax revenue if it is below projected levels.

The construction of Deerfield Drive was outlined in the amended project plan, as well as the construction of Trenton Road from the Milwaukee River to Highway I with a bridge over the Milwaukee River, which was also in the original project plan. Proposed project costs include street improvements, sanitary sewer, storm sewer and watermain construction, lighting and traffic regulation, site grading and administrative costs. The improvements are planned to occur over a three-year period.

Serigraph has successfully expanded its Decorah Road plant, creating a new $8 million, 140,000 sq. ft. facility that will provide at least 180 new jobs. The infrastructure for Wingate Creek Business Center has been constructed and lots within the park are being marketed and filled. Deerfield road is complete and the construction of Trenton Road, including a bridge over the Milwaukee River, is planned to occur in 2003.

TIF 4, known as the West Bend Corporate Center, was created in 1997 and is located south of Paradise Drive and west of U.S. Highway 45.

Before TID 4 was created, the Department of Community Development identified the district as a prime area for light industrial and office development. It was planned as a continuation of high-end office uses such as West Bend Mutual Life Insurance, the West Bend Clinic, and the Wisconsin Department of Transportation Motor Vehicles facility.

The City contacted property owners in TIF 4 about purchasing the entire area for an office park but a developer, Continental Properties, outbid the City for the land. In order to achieve the original goal of office and light industrial development, the City enacted a partnership with Continental Properties. The partnership agreement allowed commercial development immediately south of Paradise Drive, the main objective of Continental Properties, with the remaining area designated for office and light industrial uses. The partnership created a $15 million up-front expenditure by Continental Properties to construct and develop the commercial frontage along Paradise Drive. This private sector investment created tax increment that helped finance the improvements for the 65-acres of industrial and office land to the south. The development agreement requires Continental Properties to provide tax increment if the land is not developed.

Project activities for TID 4 consist of installation of public utilities such as a sewer interceptor and retention pond, street construction, site grading, signage, land acquisition, lighting, construction of a retaining wall, demolition and landscaping. Paradise Drive and a portion of 18^th Avenue were targeted for reconstruction because of increased traffic movement from the new development. Traffic signals were planned within the district to provide for safety of turning movements and proper traffic flow. Project activities were scheduled to occur over a seven-year period.

TID 4 project activities are complete except for 18^th Avenue improvements and a final layer of asphalt along Paradise Drive and Continental Drive. These activities are scheduled for completion in 2003. Large retailers such as Wal-Mart and Elder Beerman department store have located within the commercial area just south of Paradise Drive, along with smaller retailers and restaurants such as Fashion Bug, Subway and Pier One Imports. Office and industrial businesses, such as Bestech and Midwest Dialysis, are located south of the commercial development.

TID 8, which is adjacent to TID 4, was created in 1999 as a planned expansion of the West Bend Corporate Center. As in TID 4, the district is intended to expand the City’s tax base by providing the public improvements necessary to promote attractive business development. The goal is to provide and preserve employment opportunities within the City. Most of the property in TID 8 is undeveloped and public improvements are needed to allow development to occur. It is the City’s opinion that the type of development anticipated in the district would not happen without TIF.

A developer’s agreement with Continental Properties is currently being negotiated for TID 8. The terms will be similar to the agreement for TID 4, in which the developer owns and markets the land while the City provides public improvements. Project activities for TID 8 include site grading, street construction, installation of sewer and water laterals, connection of gas and electric service, land acquisition, signage, storm water collection improvements, street lighting and traffic signals. Administrative, relocation, environmental and finance costs are also anticipated. Improvements are planned for a seven-year period with project activities beginning in 2005.

TID 5 is a 19.2-acre site located in downtown West Bend, east of the Wisconsin Central railroad corridor, south of Washington Street, west of Wisconsin Street and north of Water Street. TID 5 was created in 1998 to assist in the expansion of the tax base by promoting development, redevelopment and blight elimination. The City plans to acquire property, raze blighted or underutilized structures, conduct environmental assessments and remediation and make the necessary public infrastructure improvements that will allow residential and commercial development to take place. The City is using TIF to assure that private development will locate in the blighted downtown district. New development is anticipated to increase the City’s tax base while providing and preserving employment and housing opportunities within the City.

Project activities include site grading, property acquisition, demolition, upgrading of the sewer, stormwater and water systems, reconstruction of Wisconsin Street, landscaping, relocation of tenants and property owners, and environmental remediation. The 2.36-acre downtown railyard will be relocated south of the City. Development incentives may be offered by entering into agreements with property owners or developers for the purpose of sharing costs to encourage the desired kind of improvements and assure tax base is sufficient to recover project costs. Administrative, finance and organizational costs are also included in the project plan.

The Enger Kress building, an old manufacturing building, has been redeveloped into the River Bend Senior Village. This successful example of adaptive reuse has 52 senior living units, a community room and ample parking. The developer constructed an addition to the original manufacturing building in order to accommodate the desired number of units and building amenities. A former West Bend Plating site adjacent to the Milwaukee River has been environmentally remediated and will be home to a park and sculpture. Conceptual development plans for TID 5 estimate construction of 115 housing units and 15,000 square feet of commercial or office space. Project activities are being completed and expenses will be incurred through 2004.

TID 5 is one of the City’s most ambitious redevelopment projects and there have been unique difficulties relating to the development of this area. The relocation of the downtown railyard has proved to be a greater expense than originally anticipated. The initial cost estimate of relocating the railyard was $600,000, compared to updated estimates of $1,600,000. The City has applied to the Bureau of Rails and Harbors for a grant that could cover 80% of the project activities.

Furthermore, moving and relocation costs have been high due to the age and nature of the businesses which must be relocated from the downtown area. Unlike TIDs on the perimeter of the city, downtown redevelopment districts usually experience serious environmental contamination, which means a significant amount of money must be spent on environmental assessments and remediation. It usually takes more effort to attract developers to older areas of the city because of odd-shaped parcels, contamination, and poor access, therefore development incentives are often necessary. The City is exploring options that will allow TID 5 to be financially successful such as applying for grants and loans, reconfiguring the land to be acquired, and increasing development value and density.

TID 6, located on the southwest corner of Paradise Drive and County Trunk Highway P, was created in 1998 to increase the industrial tax base, eliminate blight and create job opportunities. The property in the district was in need of substantial public improvements before new commercial and industrial development could occur. The City preferred to take the initiative and stimulate investment in the area instead of allowing it to deteriorate. High project costs related to demolition and public infrastructure improvements (Paradise Drive and South Main Street) were amounts which would have made private development unfeasible, especially when added to the overhead of site development costs. This was evident because the property remained in need of rehabilitation for many years.

TID 6 also enabled the City to undertake major public improvements to Paradise Drive and South Main Street, which provided increased vehicular and pedestrian safety in that area. A reconfigured intersection, widened lanes, and landscaping along Paradise Drive are amenities the entire community shares.

Specific project activities for TID 6 included the reconstruction of Paradise Drive, Parkview Drive construction, site grading, demolition, extension and upgrading of sewer, water and storm sewer systems, utility relocation, landscaping, environmental remediation and miscellaneous administrative and finance costs.

Project activities for TID 6 are complete. The intersection of Paradise Drive and Main Street has been reconstructed and landscaped, providing a safe and scenic entrance to the City. Bend Industries, which manufactures and sells concrete block products, operates out of a new state-of-the-art facility and their outdated plant from the 1940’s has been demolished for commercial and industrial development in the district. Commercial development south of Paradise has expanded with the addition of Menard’s and smaller retail outlets.

TID 7 was created in 1999 and is comprised of 119 acres north of State Highway 33 on the east side of the City. The TID is composed of Washington County land, the Amity Corporation and assorted office, commercial and residential parcels. This is the City’s most modest TID in terms of increment, tax base and expense.

TID 7 was created to provide public utilities on unimproved property to allow industrial and commercial development to take place. The intent was to encourage new development so that an increase in the tax base and additional employment opportunities would occur. To accomplish these goals, River Road and Lang Street will be reconstructed.

Project activities include installation of sewer, water and storm sewer systems, streets, lighting and landscaping. Site grading, administrative costs, organizational costs, relocation, environmental remediation and finance costs are also outlined as eligible expenses.

TIF is a mechanism for funding development and redevelopment projects. TIF allows an eligible municipality to fund improvements in a limited area of its jurisdiction by earmarking a defined portion of future tax revenues from that limited area as an income stream to pay off the costs of making the improvement.

The City of West Bend has been successful at using TIF to create employment opportunities, stimulate commercial, industrial and residential development, expand the tax base and improve street, water and sewer systems. Specifically, West Bend has used TIF to revitalize downtown, reconstruct major streets and intersections, retain the Serigraph company, address blighted areas and provide opportunities for industrial and commercial growth by creating industrial parks - without passing the costs directly to city residents.

The City has made significant strides in encouraging industrial development within the city limits. Through planning and engineering efforts, the City has supported the initiation of four industrial parks, three of which where created with the help of TIF. The public industrial parks (West Bend Industrial Parks East and South) are full, while the private industrial parks (West Bend Corporate Center and Wingate Creek Business Center) have installed public improvements, attracted development and continue to market their locations. Presently, the City has a substantial amount of office and industrial acreage available for development, as shown on the following charts:

It is apparent from the nearly 130 acres of available land in the new business parks that the City will not need to pursue sites for business growth in the immediate future. The projects completed through TIF have ensured that the City will be prepared to meet business growth in upcoming years.

The usage of TIF in the City of West Bend is likely to continue in the future as redevelopment projects continue to materialize. However, there is a limit on the number of TIDs a community can create. Municipalities are prohibited from establishing a TID if two things occur: 1) the equalized value of a proposed TID and all existing TIDs exceeds 7% of the total equalized value of the municipality; 2) the equalized value of a proposed TID and the value increment of all existing TIDs exceeds 5% of the total equalized value of the municipality.

The chart below shows that, in relation to the "5% and 7% rules", the City of West Bend has the potential to create another TID. Presently, the City of West Bend has $20,420,710 in TID capacity relating to the "5% rule" and $35,415,294 relating to the "7% rule".

A potential TID is the West Bend Company "west plant", located north of Washington Street and east of the Milwaukee River, a well-known landmark in the community. It has been home to the manufacturing operations and corporate offices of the West Bend Company for decades. The 27-acre west plant is currently for sale and the City of West Bend, along with the West Bend Economic Development Corporation, view this site as a opportunity to redevelop riverfront property with mixed uses that will compliment the current mix of businesses within the City’s greater downtown area. The City anticipates taking a pro-active role in the redevelopment of the property in order to prevent blight and a decline in property tax revenue.

The TIF program is a significant and valuable economic development tool for Wisconsin municipalities. TIF has been used for fifty years and continues to be a successful mechanism for funding redevelopment and industrialization projects in cities and villages.

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Casella, Sam. "Tax Increment Financing". American Planning Association. Planning Advisory Service Report 389: 1-10. 1984.

Frederick, Scott (n.d.). T.I.F. Districts: Fact vs. Myth. (WWW Page). URL http://www.nconnect.net/~sfrederick/index.htm

Horton, David, and Landon Williams. "1999-00 Report on Tax Incremental Financing". Wisconsin Department of Commerce. May 2002.

Kim, John T., Clyde W. Forrest, and Karen A. Przypyszny. "Determining Potential Gains and Losses of TIF". American Planning Association. Planning Advisory Service Report 389: 11-19. 1984.

Neumann, Paul. "1995-1998 Report on Tax Incremental Financing". Wisconsin Department of Commerce. September 1999.

Reinemann, John. "Report of the Governor’s Working Group on Tax Incremental Finance". Division of State and Local Finance, Wisconsin Department of Revenue. December 2000.

Runde, Al. "Informational Paper # 17: Tax Incremental Financing". State of Wisconsin Legislative Fiscal Bureau. January 2001.

Wisconsin Department of Revenue. "Tax Incremental Financing – An Intergovernmental/Private Partnership". PE-212 (R. 3-01).

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